"A few hours ago I let the team know that this upcoming Test will be my last," Ponting said at a hastily-called press conference here.
"It's a decision I thought long and hard about, put in long consideration about the decision, at the end of the day it was about my results and my output in this series so far," Ponting said.
"It hasn't been to the level required for batsmen and players in the Australian team. My level of performance hasn't been good enough."
Following a poor start to the Test series with low scores in Brisbane and Adelaide, Ponting said he was troubled by the "tentative" manner of his dismissals.
In the second Test in Adelaide, he was bowled twice in the same match for only the second time in a career that began in 1995.
Ponting has managed just 20 runs from three innings in two Tests so far against South Africa.
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He has scored 13,366 Test runs at an average of 52.21 and scored an Australian record of 41 centuries.
Ponting will retire at his 168th Test match, which would be the same as that of former captain Steve Waugh's record Australian appearance.